US-style youth courts, where young people "try" their peers for minor infringements, could be used to improve law and order under Lib Dem proposals.
Mr Kennedy said breakdowns could create a 'society of strangers'
Under the scheme, teenage ex-offenders and volunteers earn "time dollars" to spend on goods such as books and computers, in return for jury service.
Lib Dem leader Charles Kennedy said it was time to stop looking at "quick-fix" solutions to youth offending.
Stronger communities could end the move to a "society of strangers", he argued.
'Stop it worsening'
Youth Courts, pioneered in Washington DC, had reduced reoffending rates, a Lib Dem spokesman said.
The party is looking at whether the idea could be used in the UK but has not produced any firm plans.
The spokesman added: "The challenge is to stop people who have got into small-scale trouble getting into worse.
"This is about creating a sense of responsibility and helping to instil a work ethic."
Youth Courts in the US are able to impose minor penalties, such as community service orders, on under-18s.
Serving on juries earns vouchers to spend on educational goods.
The Lib Dem Youth Workforce has suggested extending this principle to more general community service
"Time banks" could be set up, through which young people could earn rewards such as free music or sports lessons in return for voluntary work for the elderly and other vulnerable groups.
Mr Kennedy criticised the government's "respect agenda", including such measures as anti-social behaviour orders (Asbos) for young people, for failing to address the core problems of bad behaviour.
Asbos prevent disruptive people - usually youths - from committing specified anti-social acts or entering certain areas.
These had their place, but "as a matter of last resort in the courts", Mr Kennedy said.
The decline of trust in institutions like the church and Parliament had been mirrored by a decline in trust between individuals, which made crime and anti-social behaviour more likely, he argued.
Mr Kennedy said in a speech at Westminster: "We need to change this. We need to rebuild our society.
"Cohesive and trusting societies have lower levels of crime.
"We need to invest people with a real sense of their rights and their responsibilities - to themselves, to their community and to our society as a whole."
Other ideas floated by the Youth Taskforce include enabling 16-year-olds to do a month's community service away from their homes.
It is also looking at the possibility of increased mentoring for young people and converting more disused public spaces into areas for youth projects.
Mr Kennedy said he wanted to see service to the community made "part and parcel of the school curriculum" by allowing it to count towards educational qualifications.